When Should I Take Social Security?
By Tim Maguire
February 27, 2020
Estimated Reading Time: 7 minutes
When Should I Take Social Security?
During my brief tenure with Chicago Partners Wealth Advisors, I have been introduced to the myriad intricacies comprising a healthy, organized retirement plan. Of these various complexities, perhaps the most vexing is Social Security, and more specifically, when to begin taking it.
Unfortunately, there is no singular, encompassing answer. However, as with any difficult decision, access to proper tools and resources provides invaluable information for determining the ideal course of action. These tools, in conjunction with a detailed, personalized retirement plan and the guidance of a financial professional, allow Social Security to become a significant retirement asset, rather than a complication.
How Social Security Benefits are Estimated
Understanding how and when Social Security factors into your retirement income is easier when you understand how your benefit eligibility is determined. Your benefit eligibility will depend on:
- Earnings over your working career
- Age at which you apply for benefits
- Spousal Benefits – additional money allocated to married couples
- Survivor benefits – reassessment of benefits to aide surviving spouse
Knowing that benefits are based on average earnings over your highest 35 years of income indexed to reflect increases in U.S. worker’s average wage level is interesting, but it is not necessarily information you can easily influence.
However, understanding that the age at which you apply for benefits directly impacts your eligibility is crucial to maximizing your benefits. For example, claiming benefits prior to your full retirement age (gradually rising to 67 for those born 1960 and later) can significantly, or entirely, reduce their value if you continue to have more than a modest amount of earned income.
Timing is Everything
Social Security is complicated because the timing of your benefits election has lasting effects on their value - not only to you, but also potentially those closest to you. Unfortunately, maximizing your benefits is not as simple as beginning to take them in the year you retire.
Although your retirement age is an important factor, there are a plethora of necessary considerations when determining the most advantageous date to begin benefits. Additional elements of sound Social Security planning include:
- Health status
- Life expectancy
- Income needs
- Time-horizon
Compiling this information may seem like a daunting task (and that is excluding the necessary assumptions and inputs required to analyze it), but developing a holistic plan with a professional will significantly simplify things. Most importantly, a structured retirement strategy will provide an income plan that should give you a clear understanding of where, and when, your Social Security benefits fit.
It's Personal
When to take social security is a uniquely personal decision. Your situation is vastly different than everyone else’s. You may decide that you have immediate cash needs for which you are willing to sacrifice future benefits in order to have money now. Alternatively, perhaps your retirement income allows you to defer your benefits longer and allow them to compound further. Whatever your situation, we have the tools necessary to allow you to make the best, fully informed decision tailored to your specific needs.
You may now be left with more questions than answers wondering where to begin evaluating your Social Security situation. The good news is, the answers exist and we can help you aggregate the necessary information to find them.
It begins with monitoring your earnings record and Social Security contributions. Next, that information is evaluated alongside your specific data to generate your primary strategy. Finally, that primary strategy is compared to electing early and full retirement age benefits which illustrates the tradeoffs in value and how each scenario affects your entire retirement portfolio.
With this information in hand, you can confidently elect Social Security benefits at the time that allows them to be the most beneficial to you.
Tim Maguire is a Client Service Associate at Chicago Partners. He helps manage client accounts and works with Wealth Advisors to create sound, well-diversified portfolios and financial plans.
Important Disclosure Information
Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Chicago Partners Investment Group LLC (“CP”), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from CP. Please remember to contact CP, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. CP is neither a law firm nor a certified public accounting firm and no portion of the commentary content should be construed as legal or accounting advice. A copy of the CP’s current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request.
February 27, 2020
Estimated Reading Time: 7 minutes
When Should I Take Social Security?
During my brief tenure with Chicago Partners Wealth Advisors, I have been introduced to the myriad intricacies comprising a healthy, organized retirement plan. Of these various complexities, perhaps the most vexing is Social Security, and more specifically, when to begin taking it.
Unfortunately, there is no singular, encompassing answer. However, as with any difficult decision, access to proper tools and resources provides invaluable information for determining the ideal course of action. These tools, in conjunction with a detailed, personalized retirement plan and the guidance of a financial professional, allow Social Security to become a significant retirement asset, rather than a complication.
How Social Security Benefits are Estimated
Understanding how and when Social Security factors into your retirement income is easier when you understand how your benefit eligibility is determined. Your benefit eligibility will depend on:
- Earnings over your working career
- Age at which you apply for benefits
- Spousal Benefits – additional money allocated to married couples
- Survivor benefits – reassessment of benefits to aide surviving spouse
Knowing that benefits are based on average earnings over your highest 35 years of income indexed to reflect increases in U.S. worker’s average wage level is interesting, but it is not necessarily information you can easily influence.
However, understanding that the age at which you apply for benefits directly impacts your eligibility is crucial to maximizing your benefits. For example, claiming benefits prior to your full retirement age (gradually rising to 67 for those born 1960 and later) can significantly, or entirely, reduce their value if you continue to have more than a modest amount of earned income.
Timing is Everything
Social Security is complicated because the timing of your benefits election has lasting effects on their value - not only to you, but also potentially those closest to you. Unfortunately, maximizing your benefits is not as simple as beginning to take them in the year you retire.
Although your retirement age is an important factor, there are a plethora of necessary considerations when determining the most advantageous date to begin benefits. Additional elements of sound Social Security planning include:
- Health status
- Life expectancy
- Income needs
- Time-horizon
Compiling this information may seem like a daunting task (and that is excluding the necessary assumptions and inputs required to analyze it), but developing a holistic plan with a professional will significantly simplify things. Most importantly, a structured retirement strategy will provide an income plan that should give you a clear understanding of where, and when, your Social Security benefits fit.
It's Personal
When to take social security is a uniquely personal decision. Your situation is vastly different than everyone else’s. You may decide that you have immediate cash needs for which you are willing to sacrifice future benefits in order to have money now. Alternatively, perhaps your retirement income allows you to defer your benefits longer and allow them to compound further. Whatever your situation, we have the tools necessary to allow you to make the best, fully informed decision tailored to your specific needs.
You may now be left with more questions than answers wondering where to begin evaluating your Social Security situation. The good news is, the answers exist and we can help you aggregate the necessary information to find them.
It begins with monitoring your earnings record and Social Security contributions. Next, that information is evaluated alongside your specific data to generate your primary strategy. Finally, that primary strategy is compared to electing early and full retirement age benefits which illustrates the tradeoffs in value and how each scenario affects your entire retirement portfolio.
With this information in hand, you can confidently elect Social Security benefits at the time that allows them to be the most beneficial to you.
Tim Maguire is a Client Service Associate at Chicago Partners. He helps manage client accounts and works with Wealth Advisors to create sound, well-diversified portfolios and financial plans.
Important Disclosure Information
Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Chicago Partners Investment Group LLC (“CP”), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from CP. Please remember to contact CP, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. CP is neither a law firm nor a certified public accounting firm and no portion of the commentary content should be construed as legal or accounting advice. A copy of the CP’s current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request.